President Trump threatened to impose a massive 200% tariff on European liquor, including wine and champagne. He posted on social media, “This will be great for the Wine and Champagne businesses in the U.S.” However, this statement is worrying winemakers in California.
According to a recent CNN report, grape growers and winemakers have a huge share in US wine production. Trump’s recent proposal of 200% tariffs on wine products has spread unease among the state’s wine producers.
Some winemakers take his threat with caution, but they still feel positive about the revival of interest in locally made Californian wine. Others are worried that this will cause severe damage to the industry, which is already facing difficulties due to recent crop destruction from the wildfires and droughts in California. Moreover, the demand for California-made wines is also low.
John Williams, who runs a winery in California’s Napa Valley, says, “Even though we’re a farming family business, there’s a global link.” He added, “This is not good for our industry in general.”
EU data shows that alcoholic beverages are among the major exports to the United States. In case Trum’s threat changes and becomes a reality, European wine, including other alcoholic beverages, will become way expensive for an average-class American ordering at a restaurant or buying it in a liquor shop.
Trump has also officially imposed a 25% tariff on European metals, specifically steel and aluminum. In a retaliatory move, Europe is imposing a 50% tariff on US whiskey starting from April.
Some Canadian stores are no longer selling American alcohol brands
Williams has been in the wine business for 45 years. He worries that the tariff war will create difficulties for wine distributors, who buy wine from producers and sell it to restaurants and retailers.
He said, “We all rely on the same distributors. The health of those businesses is important to wineries all over the world”. He also sold wine to Canada. The country is also on Trump’s tariff blacklist.
As tariffs have escalated tensions between US neighbors, some Canadian stores are no longer displaying American alcohol brands on their shelves. William says, “We need to sell all the cases we can. We don’t need business interruption right now.”
Overall, the demand for wine has been on a decline
According to a recent report by Silicon Valley Bank, younger generations are consuming less alcohol than baby boomers. This has caused wine demand to decline. The estimates in the report say that in 2025 the sales in the wine category in total would fall between minus 3% and minus 1%.
John Duarte, a former Republican Congressman blames this decline for the damage in smaller wineries and farms owned by families in California. Duarte also runs a family farm and grapewine nursery.
Larger alcohol companies involved in both importing and exporting wine are less likely to be affected by tariffs on EU wines compared to smaller businesses, Duarte explained. This is because the U.S. Customs and Border Protection provides refunds for certain duties, taxes, and fees paid on imported products as long as the company exports similar goods.
According to Duarte, these tariffs could unintentionally encourage big alcohol brands to import more European alcohol, even at higher prices, to increase the refunds they receive when exporting similar items.
“At first, you want to be thankful that President Trump is standing up for the domestic wine industry. That should be a good thing,” Duarte said. However, imposing a 200% tariff on top of existing excise taxes and other tariffs already in place gives a massive advantage to global wine companies that both import and export from the United States.
While Duarte acknowledged that some aspects of trade between the United States and the EU are unfair, he emphasized that the issue needs to be addressed “much more carefully.”
Not all California winemakers think that Trump’s tariffs will be entirely harmful to their business
Bruce Lundquist, co-founder of Rack & Riddle, the largest sparkling wine producer in the United States, remains optimistic that the tariffs could spark greater interest in his company’s products.
According to Comité Champagne, an industry trade association, France shipped nearly 27 million bottles of Champagne to the United States in 2023, making the U.S. the top market for its sparkling wine exports.
However, a 200% tariff on Champagne imports, along with the inevitable price increase, would likely be a major setback for that market, Lundquist noted.
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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